**EXHIBIT 10.2**

 

**Form ofStock Option Grant Letter for Non-Employee Directors**

 

[Date of Grant]

 

[Name]

[Address]

[City, State Zip]

Dear [Optionee],

 

I am pleased to adviseyou that PLC Systems Inc. (the “Company”) has, on this date, pursuant to its2005 Stock Incentive Plan (the “Plan”), awarded you a nonstatutory stock optionto purchase                    shares of the Common Stock, no par value per share, of the Company at a price of$       pershare.

 

In addition to the termsof the Plan, the following terms and conditions are applicable with respect tothis option, and your signature below shall constitute your acknowledgement andacceptance of same:

 

1.                                       This option will become exercisable (“vest”)as to[                        ][,provided that any unvested shares shall become immediately exercisableupon termination of your service as a Director of the Company for any reasonother than related to your willful misconduct or willful failure to performyour responsibilities as a Director of the Company, as determined by theCompany, which determination shall be conclusive].  *Note: Thepreceding clause may be inserted at the discretion of the Company’s Board ofDirectors.*  The right ofexercise shall be cumulative so that to the extent the option is not exercisedin any period to the maximum extent permissible it shall continue to beexercisable, in whole or in part, with respect to all shares for which it isvested until the earlier of the expiration date or the termination of thisoption under Section 2 hereof or the Plan.

 

2.                                       This option is subjectto the following exercise terms:

 

(a)                                  Should your service asa Director of the Company terminate for any reason other than death ordisability (as defined in the Internal Revenue Code of 1986, as amended (the “Code”)),all unexercised options shall terminate ninety (90) days after the date of suchtermination (but in no event after [five (5)/ten (10)] years from the date ofgrant); provided, however, that (i) if, as of the date ofsuch termination for any reason other than death or disability, you have been aDirector of the Company continuously for at least the five (5) years priorto such date, then all of your unexercised options shall instead terminatethree (3) years after the date of such termination (but in no event after[five (5)/ten (10)] years from the date of grant), and (ii) this optionshall be exercisable only to the extent that you were entitled to exercise thisoption on the date of such termination.

 

(b)                                 In the event your service as a Directorof the Company terminates as a result of your death, the outstanding optionsexercisable by you at the date of your death may be exercised by your estateuntil one (1) year from the date of your death (but in no event after[five (5)/ten (10)] years from the date of grant), provided that thisoption shall be exercisable only to the extent that this option was exercisableby you on the date of your death.

 

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(c)                                  In the event your service as a Directorof the Company terminates as a result of your disability (as defined in theCode), the outstanding options exercisable by you at the date of suchtermination may be exercised until one (1) year from the date of suchtermination (but in no event after [five (5)/ten (10)] years from the date ofgrant), provided that this option shall be exercisable only to theextent that this option was exercisable by you on the date of your disability.

 

3.                                       This option may be exercised in whole orin part from time to time; provided, however, that an option maynot be exercised as to less than 100 shares at any one time unless it is beingexercised in full and the balance of the shares subject to the option is lessthan 100.  Each election to exercise thisoption shall be in writing, signed by you, and received by the Company at itsprincipal office, accompanied by this letter, and payment in full in the mannerprovided in the Plan.

 

4.                                       The shares of Common Stock underlyingthis option and the exercise price therefor shall be equitably adjusted fromtime to time for stock splits, reverse splits, stock dividends andreclassifications of shares in accordance with the Plan.

 

5.                                       [In the event of a ReorganizationEvent (as defined in the Plan), the Company shall give prior notice of such anevent to you, and you may exercise up to 100% of this option as of a timespecified in such notice.  If you do notexercise the option prior to the consummation of the Reorganization Event, allunexercised portions of this option shall terminate and be of no further forceor effect.]  *Note: The preceding clause may be inserted at thediscretion of the Company’s Board of Directors.*

 

6.                                       No shares will be issued pursuant to theexercise of this option unless and until you pay to the Company, or makeprovision satisfactory to the Company for payment of, any federal, state orlocal withholding taxes required by law to be withheld in respect of thisoption.

 

7.                                       This option may not be sold, assigned,transferred, pledged or otherwise encumbered by you, either voluntarily or byoperation of law, except by will or the laws of descent and distribution, and,during your lifetime, this option shall be exercisable only by you.

 

8.                                       Unless earlier terminated, this optionwill expire [five (5)/ten (10)] years from the date of grant.

 

9.                                       This option is subject to the provisionsof the Plan, a copy of which is furnished to you with this option.

 

When you wish to exercise this stock option, pleaserefer to the provisions of this letter and the Plan and then correspond inwriting with the Chief Financial Officer of the Company. Further, pleaseindicate your acknowledgment and acceptance of this option by signing theenclosed copy of this letter and returning it to the undersigned or                          within 30 days of your receipt of this grant.

 
|   |   | Sincerely,                            |
|--------|--------|---------------------------------------|
|   |   |                                  |
|   |   |                                  |
|   |   | Mark R. Tauscher,                     |
|   |   | President and Chief Executive Officer |

 

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| ACKNOWLEDGEMENT AND CONSENT: |   |   |
|------------------------------|--------|--------|
|                         |   |   |
|                         |   |   |
|                         |   |   |
| Optionee                     |   |   |

 

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